Australian coal companies are expected to absorb China’s tariff hikes, although some mid-sized miners are in danger of losing money.

Most Australian coal producers are expected to absorb Chinese tariff hikes as the world’s second largest economy seeks to also impose an impost on its own producers.

But industry commentators say some local mid-tier coal miners are in danger of losing money unless thermal and coking coal prices improve.

China’s government on the weekend said it would impose a coal resources tax of between two and 10 per cent to improve the country’s worsening environmental situation.

The announcement came a day after China’s shock decision to place a levy of three per cent on coking coal imports and six per cent on lower grade thermal coal.

Simon Bennison, chief executive of the Association of Mining and Exploration Companies (AMEC), said the tariff decision would compound problems for mid-tier coal producers who were struggling with margins.

“It puts a significant direct cost onto the bottom line,” Mr Bennison told AAP.

“You’ve got companies that are working in virtually break-even who will obviously be taken into negative territory unless we get a kick in the price of thermal and coking coal.”

However he said it was still unclear whether China’s domestic resource tax would help balance out the announced tariffs.

Prime Minister Tony Abbott has described China’s tariff decision as a “hiccup” as free trade negotiations with Australia’s largest trading partner continue.

Mr Abbott hopes to clinch a free trade deal with China at or before the G20 summit in Brisbane in November.

On Monday he opened a new coal mine in Queensland and told BHP workers that coal was an essential part of Australia’s economic future.

Morningstar analyst Mathew Hodge said the issue seemed to be bigger than just coal, but added the potential long-term effects on the local industry were uncertain.

“External conditions are already very difficult so this would make things even harder,” Mr Hodge said.

“Supply and demand is going to have to meet at a price or margins that are different to here,” he said.

CMC Markets analyst Michael McCarthy said the local coal industry would be concerned about future tariff hikes.

“It’s clearly not a positive, but it might not be as negative as the first headlines appeared given that internal coal producers will also be subject to a lift,” Mr McCarthy said.

“It’s not a positive for the market and we’re seeing some pressure on coal miners.”

He said coal stocks were already under pressure following the Australian National University’s recent announcement that it is divesting its fossil fuels portfolio.